What is Responsible Investing? What are RI/ SRI Funds?
RI / SRI stands for Responsible Investing / Social Responsible Investing.
Responsible investment (RI) refers to the incorporation of environmental, social and governance factors (ESG) into the selection and management of investments.
RI has boomed in recent years as investors have recognized the opportunity for better risk-adjusted returns, while at the same time, contributing to important social and environmental issues.
Environmental, Social and Governance (ESG) Issues
Environmental, social and governance (ESG) issues are some of the most important drivers of change in the world today. And these are not just societal issues; they are important economic issues with significant implications for businesses and investors.
RI contributes to positive societal change
In addition to its financial benefits, responsible investing can also help investors contribute to positive social and environmental outcomes. This occurs by providing capital to corporate sustainability leaders. It also occurs by improving a company’s ESG performance through shareholder engagement.
A great example of shareholder engagement took place when NEI Investments submitted a shareholder proposal to Suncor Energy in 2016, asking the company to disclose and report regularly on its plans for operating in a low-carbon future. Suncor’s board and management accepted the proposal, and the company published a report on how it plans to reduce its carbon footprint, manage climate risk, diversify into renewables and align its business strategy with a carbon-constrained world. This raised the bar for corporate sustainability disclosure in the energy sector.
Responsible investors also use shareholder engagement to increase the representation of women on boards, reduce the CEO pay gap, and to achieve many other objectives related to corporate responsibility.
